A third of CEOs in Asia Pacific feel their CFOs are not up to the challenge, KPMG survey finds

A third of CEOs in Asia Pacific feel their CFOs...

CEOs in Asia Pacific see a powerful future ahead for the CFO, according to a new report by KPMG, "The View from the Top". But almost one-third of those CEOs feel their CFO is not ready for the challenge.

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CEOs in Asia Pacific see a powerful future ahead for the CFO, according to a new report by KPMG, "The View from the Top". But almost one-third of those CEOs feel their CFO is not ready for the challenge.

KPMG, in association with Forbes Insights, conducted a survey of 178 senior business executives at Asia Pacific companies, including 30 from China and Hong Kong, in September and October of 2014. Responses came primarily from senior executives in financial services, manufacturing, consumer products and telecoms based in 13 Asia Pacific countries and territories.

The report finds that two thirds of the CEOs in Asia Pacific think that applying financial data analysis to achieve profitable growth is an important or extremely important initiative by CFOs in order to bring strategic value to the company. This is followed by applying financial data analysis to derive new operating models (59 percent) and improving forecasting capabilities (57 percent).

CEOs from China and Hong Kong however, have somewhat different views. Sixty-three percent see deriving competitive advantage from risk management as the top priority; attracting and retaining top-notch finance talent ranked second (60 percent), followed by applying financial data analysis to achieve profitable growth (57 percent). Isabel Zisselsberger, Partner, Financial Management, KPMG China, says: “Looking ahead to 2015, I expect these priorities to continue to resonate with our clients in Hong Kong and China, due to increased competition, regulatory and compliance costs, as well as the need to better manage profitability.”

The report notes that CFOs must focus on the key areas of concern – taking a more strategic approach; improving their talent management skills; leveraging technology and data better; and lastly streamlining reporting and control tasks so that they are not bogged down in compliance and regulatory issues.

Egidio Zarrella, Clients and Innovation Partner and Data & Analytics Head, KPMG China, adds: “The CFO has to start playing a major role in the whole technology agenda. They’re going to be asked more and more to find insight from the financials rather than just pumping historical data. CFOs cannot just collect, consolidate and report the numbers, they are expected to be able to explain the numbers or understand what the numbers are telling them.”

Other key findings:

CEOs have set a high bar for CFOs. Almost three-quarters (72 percent) of CEOs from high-performing organizations believe that the CFO's role will increase in importance over the next three years, as compared with other C-suite roles.

CEOs put a huge value on people skills and see their CFOs as lacking in them. Eighty percent of CEOs from high-performing organizations say that nothing is more important than talent management, but many also believe their CFOs can and should do a better job of managing their teams.

CEOs value growth-oriented initiatives the most, and traditional areas of the finance function the least. Big-picture thinking and strategic approach are the most important attributes for a CFO, say 49 percent of CEOs.

Technology will be a make-or-break test for CFOs. Sixty-three percent of CEOs from high-performing organizations believe that technology will have the greatest effect on the future role of the CFO.

CFOs need to transform the regulatory burden into an opportunity—or at least avoid getting mired in the detail to the detriment of big-picture thinking. Forty-three percent believe that the stringent regulatory environment is impeding the CFO's ability to focus on other areas, while 42 percent see the regulatory environment as an opportunity to derive competitive advantage.

Geoff Wilson, Chief Operating Officer, KPMG in Asia Pacific, concludes: “This report contains good and bad news for CFOs. The good news is that CEOs believe the CFO’s role will increase in importance over the next three years, compared to other C-suite roles. The bad news is that almost a third of the surveyed CEOs don’t believe their CFOs understand or assist enough with the business challenges they are facing.”

“When KPMG asked CFOs a year ago about their roles, 60 percent were happy with the overall performance of their finance function, and on average less than 10 percent of CFOs rated any of their finance processes or services as a weakness. So there is a clear disconnection between the actual performance of the CFOs and the expectations of their bosses.”

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About this research

KPMG, in association with Forbes Insights, the strategic research and thought leadership practice of Forbes Media, conducted a survey of 178 senior business executives at Asia Pacific companies, including 30 from China and Hong Kong, in September and October of 2014. The insights and commentary found in this report are derived from both a survey and qualitative interviews.

All companies surveyed report annual revenues of USD500 million or more with 56 percent reporting revenue of over USD5 billion. Responses came primarily from senior executives in financial services, manufacturing, consumer products and telecom based in 13 Asia Pacific countries and territories. Just over half are CEOs, with another 15 percent listed as owners. The rest hold the title of managing director, president or chairman. Many respondents —72 percent— were once CFOs.

About KPMG

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 155,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.